 Boundaries
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There exists, however, some concern over the applicability
of RM to the capacity constrained firms (Donaghy et al 1998,
Lee-Ross & Johns 1997). Although hotels, airlines, rail,
car hire and TV advertising firms have similarity, they are
not similar. It would be dangerous for organisations to follow
directly the RM practices from different industries. Each
industry must identify is own, unique characteristics and
encompass the principles of Revenue Management that are suitable
for them. Some of these boundaries include:
Multiple Units of Inventory
In TV advertising, the rate will vary according to the number
of time slots purchased, the schedule, the demand of that
time slot and the time of day. With hotels, guests can arrive
on a low rate and stay through a number of high rate days.
This obviously leads to a problem with determining the right
rate to charge the customer for the unit of inventory, when
using multiple units. Many of these industries (Kimes & Chase
1998) have a different unit of inventory based upon pricing
and duration. Prices can be fixed (one price for the same
service for all customers for all times) or or variable (different
prices for different times or different customer segments).
Duration can be predictable or unpredictable.
Multiplier Effect
If an hotelier focuses on the revenue that can be generated
from the accommodation function, he/she may be ignoring the
revenue that could be generated in other departments of the
hotel such as restaurants, conference and banqueting, and
leisure facilities. Alternatively when holiday-makers book
a holiday package, this may involve air tickets, car hire
and accommodation. Therefore, what should the tour operator
concentrate revenue pricing decisions on? If the tour operator
focuses all revenue decisions on flights, this will have
an effect on car hire and accommodation.
Rate Structure
A Revenue Management approach leads to a range of prices
for products and services depending on the demand and supply
equation. A multiple set of pricing structures can alienate
the customer and cause confusion (Edgar 1997). The customer
does not understand the process and eventually looks for
alternatives. The process is perceived by the customer as
unfair. (Kimes 1994)
Distribution of Information
A Yield Manager must know that the inventory he/she is selling,
is a true reflection of the available inventory. Research
(Yeoman & Ingold 1997, Donaghy et al 1999) concluded
that when inventory is sold, that inventory must reflect
the true availability of inventory available. Therefore,
the distribution system must be able to provide accurate,
up to date and reliable information.
Market Segmentation
RM prefers, if companies operate in a diverse customer
base, in which they can make a series of micro-market segment
forecasts. The application of RM is more difficult where
companies only have one type of customer and are therefore,
unable to micro-market segment.
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